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Career Bureaucrat Rises to Prominence in Housing Crisis

WASHINGTON — The phone calls have been streaming into the Federal Housing Administration for months now — from White House budget officials, Democratic lawmakers and the occasional cable television news producer — all asking for a few minutes with the man in charge.

That man is Brian D. Montgomery, the F.H.A. commissioner, a ruddy-faced Texan who is so accustomed to toiling in bureaucratic obscurity that he likes to joke that some people think he runs the Federal Highway Administration.

Today, President Bush and Democrats in Congress are all counting on the F.H.A. to lead the national effort to rescue homeowners at risk of foreclosure. And Mr. Montgomery, a longtime Bush loyalist who came to the job with little housing experience, has gained prominence as an unexpectedly influential official whose quiet efforts to modernize a stagnant agency has won the respect of Democrats and Republicans alike.

“I didn’t take the job to be in the spotlight; I’ve been very passionate about this,” said Mr. Montgomery, 51. But with Congress considering legislation that would vastly expand the F.H.A.’s role in the housing crisis, even some of Mr. Montgomery’s admirers are wondering: Is he up to the challenge?

“He takes his job seriously and, to the best of my knowledge, he does not play politics,” said Senator Patty Murray, Democrat of Washington who is chairwoman of the housing subcommittee. “But I have some serious concerns about F.H.A. and what it is likely to be asked to do in the future.”

Mr. Bush has asked the F.H.A to help borrowers in crisis refinance into stable, government-backed mortgages. By December, the plan, called F.H.A. Secure, is expected to help about 500,000 families refinance. That is more than three times the number of mortgages refinanced by the agency in fiscal year 2007.

Meanwhile, Congress is moving legislation that will allow an additional 500,000 homeowners to refinance over the next five years.

The F.H.A. insures mortgages for many first-time, minority and low-income borrowers. It does not lend money directly but provides mortgage insurance through private lenders.

Critics warn that the agency, which is overseen by the Department of Housing and Urban Development, lacks the capacity to handle such an extraordinary increase in business.

Housing officials say they need to fill 300 vacancies by Sept. 30, when the fiscal year ends. And they say they need even more staff to cope with the new caseload from F.H.A. Secure. The housing bills under consideration would allow the agency to borrow personnel from other agencies.

In addition, the agency’s computer systems are so antiquated — the average age is 18 years old — that Mr. Montgomery has joked that he is in the market for Fortran programmers. (To his astonishment, a staff member told him the agency actually does need experts familiar with Fortran, the computer language introduced in 1957 and now rarely used. Some of the agency’s machines have been humming along for 28 years.)

Senator Christopher S. Bond, Republican of Missouri, said the jury was still out on Mr. Montgomery. “We wish him well, but we’re going to have to wait and see,” he said.

Mr. Montgomery has defied expectations since he left his job in 2005 as secretary of the cabinet in the White House to head the F.H.A. He was clearly an unconventional choice.

The blue-eyed son of a Texas-born father and a Mexican mother, Mr. Montgomery came to the job with a passion for politics and a self-deprecating wit. He quips that he has “a face made for radio.”

But he had little experience with national housing policy or housing finance.

He had handled planning, logistics and travel for the White House as well as for Mr. Bush’s gubernatorial and first presidential campaign. He had served as communications director for the Texas Department of Housing when Mr. Bush was governor.

Photo

Brian D. Montgomery was appointed to the F.H.A. in 2005.Credit
Stephen Crowley/The New York Times

Still, many Democrats and housing experts initially dismissed him as an inexperienced caretaker who would allow the agency to continue to wither in the face of fierce competition from subprime lenders.

From 2002 to 2006, the number of single-family loans insured by the F.H.A. fell to just over 300,000 from about 1.3 million as homeowners spurned conventional loans in droves for their exotic counterparts. “You were kind of starting to see F.H.A. fade into the night,” Mr. Montgomery said.

But lawmakers and industry experts say Mr. Montgomery brought an unexpected sense of vigor to the moribund agency.

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He reached out to Democrats in Congress and pushed to streamline cumbersome rules that had driven some lenders away. In 2006, he allowed banks to endorse mortgages electronically as opposed to sending in stacks of folders for review. In 2007, he created an F.H.A. Web site to allow lenders to more easily navigate the agency’s rules.

He has worked closely with lawmakers on proposed legislation to make the F.H.A. more competitive by increasing loan limits and making the process of buying condominiums less onerous, among other things.

“I made the decision early on,” said Mr. Montgomery, who served under Alphonso R. Jackson, the housing secretary who resigned amid a contracting scandal in April. “I’m not going to go in there with partisan stripes on my sleeve.”

“Actually, I rather like him,” said Representative Maxine Waters, Democrat of California and chairwoman of the Housing Subcommittee in the House.

“He stands up for F.H.A., and he had some strong views about how it should operate, but he made compromises with us,” Ms. Water said.

Allen Jones, chairman of the Mortgage Bankers Association, said Mr. Montgomery listened to their concerns. “He’ll answer questions until you don’t have another one left,” Mr. Jones, an executive at Bank of America, said.

There have been some missteps.

Mr. Montgomery has criticized F.H.A.’s seller-financed down-payment loan program, which has left the agency on the brink of insolvency. But he initially supported the program, which allows home sellers to cover the buyer’s down payment with financial help from nonprofit companies. Owners typically add that sum or more to the total cost of the house, and the default rate has been two to three times that of conventional loans.

Meanwhile, F.H.A. Secure has helped only 2,276 homeowners at risk of foreclosure, despite its ambitious aspirations. Most of the program’s participants are homeowners who have made their mortgage payments on time.

In addition, H.U.D.’s inspector general has criticized the agency’s failure to consistently refer potentially fraudulent loans to the inspector general and its failure to weed out appraisers with expired licenses from F.H.A.-approved lists. Some worry that the agency’s expanding workload will exacerbate such troubles.

Mr. Montgomery notes that he shifts course when necessary. He changed his opinion on the seller down-payment loan program. His agency has fine-tuned F.H.A. Secure to help more struggling homeowners. And officials say he has taken steps to deal with the problems identified by the inspector general.

“I think he’s been serious, and that’s not something you could take for granted under the Alphonso Jackson regime,” said Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee.

In fact, Mr. Frank said he was startled recently when someone reminded him that Mr. Montgomery was a political appointee who had little housing experience when he was confirmed.

A version of this article appears in print on , on Page C1 of the New York edition with the headline: Unconventional Choice Ascends To Prominence in Housing Crisis. Order Reprints|Today's Paper|Subscribe